New Residence Rules

For years the rules regarding tax residence and non-residence in the UK have been governed by HMRC guidelines and case law. That has left uncertainty especially since HMRC won a case against a taxpayer whom HMRC admitted had followed all of their rules carefully! The government proposed new legislation to define tax residence in the 2012 budget but decided to postpone the implementation of these until 2013. So we are expecting new legislation to take effect from 6th April 2013 and it makes sense to be prepared in advance.

The new rules are meant to leave most people’s tax situation unchanged and it is estimated that only 5% of taxpayers at most should have to review their situation. But it is important to be quite clear about your own situation and we have produced a more detailed guide to help you do so. The rules look complex at first sight but the three parts of the residence test are meant to be dealt with in order. In effect that means that, if you go through part A and decide you are non-resident you do not need to go through parts B and C, and it’s part C that is the most complex.

If you are unclear about what your situation will be under the new rules then please do get in touch as soon as possible.